What the new lease accounting standards mean for you

Learn about recent changes in lease accounting guidance, and what they could mean for how companies record leases.

Tags: Assets, Regulations, Loans
Published: April 05, 2018

In February 2016, the Financial Accounting Standards Board (FASB) issued the ASU 2016-02, Leases (Topic 842) standard for lease accounting. Since leases are widely used for a variety of business needs (from short-term and long-term asset financing), this new standard will mean big changes in how companies record leases.

Latina Fauconier of PricewaterhouseCoopers hosted a webinar that provides an in-depth analysis of the new standard. Fauconier covers several key changes from prior standards and shows viewers how it will impact lessee balance sheets in the future. Watch the webinar here.

Key changes of the new standard

FASB’s new standard has widespread implications to the lease recording process. Here’s an overview of the major changes:

    1.  Balance sheets

  • Virtually all leases coming on the balance sheets
  • Asset and obligation (similar to a capital lease)

    2.  Profit and loss

  • Dual recognition model for U.S. Generally Accepted Accounting Principles
  • Emphasizes interest and amortization over single lease expense

    3.  Disclosures

  • Enhanced qualitative and quantitative disclosures are required

    4.  Transition

  • A modified retrospective approach is required
  • Specified reliefs are available

 

For more information on the new lease accounting standards, check out the FASB’s standards documentation page. If you need help navigating the new terrain, contact your equipment finance relationship manager.

 

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